GM may go it alone on $5.3 billion Opel revamp
BY RON HAMMERTON | 13th Nov 2009
German economy minister Rainer Bruederle told German TV that interim head of GM Europe Nick Reilly and GM vice-president John Smith this week had told him the company could shoulder the financial cost of the re-organisation, which GM has previously estimated at €3.3 billion (A$5.3b).
But Reuters reported that Mr Bruederle told the GM executives at their meeting in Germany that the US company would not be able to count on German government support for the overhaul of Opel “for the time being”.
“I expressed my expectation that General Motors should basically carry out the financing itself,” Mr Bruederle was quoted as saying.
The German government is reportedly angry with the back-flip by GM on the planned sale of Opel to Canadian parts maker Magna International.
Germany had offered €4.5 billion ($A7.2b) in aid to Magna and its Russian investment partner Sberbank, but appears reluctant to offer any such aid to GM after it decided at the 11th hour last week to keep Opel in the GM fold.
However, Mr Bruederle left the door slightly ajar, saying any company could apply for government assistance.
GM has yet to say if it will officially apply for aid, saying only that it could cut Opel’s fixed costs for a third of the price to taxpayers that Magna was charging.
German automotive unions fear up to 10,000 jobs will be lost in the shake-out. They have announced they will not negotiate with GM until it has laid out its plans for Opel until 2014.
Opel’s German rivals also have been critical of the prospect of any bailout, with the bosses of both Daimler and Volkswagen speaking up on the subject.
Daimler chairman Dieter Zetsche told reporters in New York that the restructuring of Opel was GM’s problem.
“That should not be a problem of the German state,” he said.
Volkswagen CEO Martin Winterkorn told an automotive awards ceremony in Germany that GM was right to keep Opel but it should fix the company without state help.
“When things are bad, it’s the parent company’s task to help the daughter company,” he said.
Mr Winterkorn, whose company has not only supported VW’s loss-making Spanish subsidiary SEAT but also helped to salvage Porsche, made his statement while seated next to Opel’s former chairman Carl-Peter Forster, who resigned last week and was replaced by Mr Reilly.
English-born Mr Reilly will retain his current role as president of GM international operations, based in Shanghai, while he oversees the Opel revival.
Meanwhile, GM is searching for a permanent CEO for GM Europe.
In the UK, the decision by GM to retain Opel and Vauxhall was more warmly welcomed than in Germany, as workers at Vauxhall’s Ellesmere Port factory fancy their chances of retaining their jobs more under GM than Magna, mainly because Mr Reilly was once manufacturing director at the factory. He is even said to have taken a pay cut to help keep the factory alive during his stint there.
British business secretary Lord Mandelson said he was keen for "very early discussions with GM over their plans for the business and how they will affect British plants and workers”.
